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Top 5 Legal Mistakes Every Entrepreneur Should Avoid

August 7, 2017 pdefensepde 0

Starting a new business is a brave step. Becoming an entrepreneur is very exciting but, at the same time, it is an uphill task that requires many cautious steps.  You must not forget to look into the legal requirements of your business because failure to do so could get you into hot water later on. Today, I am going to share the top 5 legal mistakes that every entrepreneur must avoid to become successful. One of the first ones before we get into the list is not getting the right lawyer. Some of your local car wreck lawyers may not be the best bet for your business endeavours, so find a lawyer in the niche you are needing them for to begin with.    Choosing the Wrong Entity Any entrepreneur should choose the entity he should use for his business. If you are aiming to start a business, you can go for the sole proprietorship, partnership, or a corporate. You must choose the entity according to your ability and capital.  For example, if you have a low capital, then sole proprietorship can be the best option to start the business. Sole proprietorship requires minimal documents and it will protect you from losing your personal assets in case your business venture becomes unsuccessful.  On the other hand, your risk might be higher if you go for partnership or corporation. Hence, choosing the right entity has a great importance by law.   Incorporating Late If you are just transforming your business ideas into reality and you are spending a lot of time and money for the business, then you must incorporate your business early on. There are several benefits of incorporating your business early. Registering your business as a corporation or limited company can protect your personal liabilities. Incorporating your business safeguards the interests of several stakeholders, such as owners, partners, founders, and investors. Registering your business protects your property and copyrights as well. If you do not register your business, then another person might use it for their own purposes.   Delaying Agreements of Ownership and Operations If you are not the sole owner and you have multiple investors or partners, then you must setup you agreements earlier on. You must decide duties, responsibilities, rights, investment, profit shares, asset contributions, and removal process with all the partners in writing. You must write all the terms and conditions of the agreements in black and white. Your agreement must be validated by the legal authority. You must avoid keeping the written agreement without validation of the legal authorities. You must maintain the proper documentation and also update the agreements if any of the investor or partner changes.   Not Getting a Business License Many businesses and services require getting a business license before starting.A lot of entrepreneurs do not pay attention to get a business license earlier on and this negligence incurs severe penalties. Even, if you are running a home-based business, check with your attorney because you may still need a license.